India's crude basket averages $120 in October, highest since 2012

The Indian crude basket, the average price of the crude oil India imports, has averaged about $120 a barrel so far in October 2026, its highest monthly level since March 2012, according to a Business Standard analysis published on October 25. Figures based on data from the Petroleum Planning and Analysis Cell (PPAC), the oil ministry's data arm, put the October average at about $121.25 a barrel, nearly double the $65.08 of October 2025. The surge, driven by the crisis in West Asia, threatens the margins of state-run oil marketing companies, adds to inflation worries and puts pressure on the Centre's finances.

India imports most of the crude oil it uses, so the price of the Indian basket feeds into almost every corner of the economy. It shapes the cost of petrol, diesel and cooking gas, the bills of airlines and transport firms, the price of plastics and fertilisers, and the country's trade balance. When crude stays above $100 for months, as it has for much of this year, the effects build up.

The first pressure point is the state-run oil marketing companies that sell petrol and diesel. If retail fuel prices do not rise in step with crude, these companies absorb the difference and their profits shrink or turn into losses. An effective cost of around $125 a barrel, as one brokerage estimates, means marketing losses on fuel are back as a concern.

The second is the government's budget. Higher oil prices can mean higher subsidies on cooking gas and fertilisers, or lost revenue if excise duties are cut to cushion consumers. That is why economists are pencilling in a fiscal deficit above the Budget's 4.3% target. A wider deficit can push up government borrowing and bond yields, which in turn raises borrowing costs for companies and households.

The third is inflation and the rupee. Costlier oil raises transport and production costs across the economy, and a bigger import bill increases demand for dollars, weakening the rupee. Both make the Reserve Bank of India's task harder at a time when it is already trying to contain price pressures.

For households, the effect shows up in fuel prices, freight costs passed on to food and goods, and the cost of travel. For businesses, especially those that use a lot of fuel or petroleum-based inputs, margins come under strain.

Short-term: Oil marketing companies face pressure on margins, and markets will watch whether fuel prices or excise duties change. The full-month October figure will be confirmed when PPAC publishes its data.

Long-term: If prices stay this high, the fiscal deficit could overshoot its target, inflation could stay elevated and the case for faster diversification of India's energy sources, including renewables and electric transport, grows stronger.

Who is affected: Households paying for fuel and goods, oil marketing companies, transport and airline businesses, fertiliser and chemical makers, and the central government's budget.

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